CommScope Holding Company, Inc. Condensed Consolidated Statements of Operations (Unaudited -- In thousands, except per share amounts)

Transcription

1 Condensed Consolidated Statements of Operations (Unaudited -- In thousands, except per share amounts) Three Months Ended Six Months Ended June 30, June 30, Net sales $ 1,306,788 $ 867,290 $ 2,450,767 $ 1,692,690 Operating costs and expenses: Cost of sales 753, ,595 1,449,917 1,084,791 Selling, general and administrative 234, , , ,468 Research and development 51,934 27, ,124 55,718 Amortization of purchased intangible assets 76,015 44, ,631 89,410 Restructuring costs, net 7,605 1,894 13,677 3,765 Asset impairments 15,293 Total operating costs and expenses 1,122, ,892 2,176,172 1,490,152 Operating income 183, , , ,538 Other income (expense), net (14,653) 86 (14,352) 2,713 Interest expense (74,113) (49,036) (146,675) (85,365) Interest income 1,148 1,031 3,727 2,060 Income before income taxes 96,254 61, , ,946 Income tax expense (34,293) (15,887) (42,754) (36,878) Net income $ 61,961 $ 45,592 $ 74,541 $ 85,068 Earnings per share: Basic $ 0.32 $ 0.24 $ 0.39 $ 0.45 Diluted (a) $ 0.32 $ 0.24 $ 0.38 $ 0.44 Weighted average shares outstanding: Basic 192, , , ,084 Diluted (a) 196, , , ,570 (a) Calculation of diluted earnings per share: Net income (basic) $ 61,961 $ 45,592 $ 74,541 $ 85,068 Weighted average shares (basic) 192, , , ,084 Dilutive effect of stock options 3,832 4,322 3,819 4,486 Denominator (diluted) 196, , , ,570 See notes to unaudited condensed consolidated financial statements included in our Form 10-Q.

2 Condensed Consolidated Balance Sheets (Unaudited -- In thousands, except share amounts) June 30, 2016 December 31, 2015 Assets Cash and cash equivalents $ 516,043 $ 562,884 Accounts receivable, less allowance for doubtful accounts of $16,365 and $19,392, respectively 993, ,041 Inventories, net 465, ,815 Prepaid expenses and other current assets 128, ,900 Total current assets 2,103,497 2,004,640 Property, plant and equipment, net of accumulated depreciation of $275,457 and $243,806, respectively 505, ,706 Goodwill 2,797,234 2,690,636 Other intangible assets, net 1,982,792 2,147,483 Other noncurrent assets 125, ,166 Total assets $ 7,514,548 $ 7,502,631 Liabilities and Stockholders' Equity Accounts payable $ 456,830 $ 300,829 Other accrued liabilities 400, ,743 Current portion of long-term debt 12,500 12,520 Total current liabilities 869, ,092 Long-term debt 4,935,355 5,231,131 Deferred income taxes 227, ,487 Pension and other postretirement benefit liabilities 38,633 37,102 Other noncurrent liabilities 123, ,099 Total liabilities 6,194,343 6,279,911 Commitments and contingencies Stockholders' equity: Preferred stock, $.01 par value: Authorized shares: 200,000,000; Issued and outstanding shares: None Common stock, $0.01 par value: Authorized shares: 1,300,000,000; Issued and outstanding shares: 192,618,113 and 191,368,727, respectively 1,937 1,923 Additional paid-in capital 2,247,504 2,216,202 Retained earnings (accumulated deficit) (737,853) (812,394) Accumulated other comprehensive loss (177,254) (171,678) Treasury stock, at cost: 1,096,926 shares and 986,222 shares, respectively (14,129) (11,333) Total stockholders' equity 1,320,205 1,222,720 Total liabilities and stockholders' equity $ 7,514,548 $ 7,502,631 See notes to unaudited condensed consolidated financial statements included in our Form 10-Q.

3 Consolidated Statements of Cash Flows (Unaudited -- In thousands) Three Months Ended June 30, Operating Activities: Net income $ 61,961 $ 45,592 $ 74,541 $ 85,068 Adjustments to reconcile net income to net cash generated by operating activities: Depreciation and amortization 103,559 66, , ,723 Equity-based compensation 9,411 10,125 18,246 15,378 Deferred income taxes (37,879) (20,506) (48,319) (34,129) Asset impairments 15,293 Excess tax benefits from equity-based compensation (5,347) (3,750) (6,728) (14,164) Changes in assets and liabilities: Accounts receivable (78,772) (22,940) (137,532) (118,257) Inventories (8,523) 3,246 (18,386) 9,038 Prepaid expenses and other assets 16,517 7,011 10,139 5,877 Accounts payable and other liabilities 91,836 (14,951) 164,855 (2,269) Other (2,259) 1,930 (4,010) 1,001 Net cash generated by operating activities 150,504 72, ,596 73,266 Investing Activities: Additions to property, plant and equipment (17,712) (15,868) (32,184) (24,081) Proceeds from sale of property, plant and equipment , Net purchase price adjustment (9,092) 6,263 Acquisition funds held in escrow (2,746,875) (2,746,875) Other 1, ,656 3,097 Net cash used in investing activities (25,566) (2,762,231) (20,525) (2,767,686) Financing Activities: Long-term debt repaid (303,124) (500,318) (306,270) (502,517) Long-term debt proceeds 3,246,875 3,246,875 Long-term debt financing costs (9,025) (9,025) Proceeds from the issuance of common shares under equity-based compensation plans 5,501 4,952 6,991 16,951 Excess tax benefits from equity-based compensation 5,347 3,750 6,728 14,164 Tax withholding payments for vested equity-based compensation awards (75) (2,796) Net cash generated by (used in) financing activities (292,351) 2,746,234 (295,347) 2,766,448 Effect of exchange rate changes on cash and cash equivalents (4,912) 1, (8,390) Change in cash and cash equivalents (172,325) 57,817 (46,841) 63,638 Cash and cash equivalents, beginning of period 688, , , ,321 Cash and cash equivalents, end of period $ 516,043 $ 792,959 $ 516,043 $ 792,959 See notes to unaudited condensed consolidated financial statements included in our Form 10-Q. Six Months Ended June 30,

4 Operating income, as reported $ $ $ $ Adjustments: Amortization of purchased intangible assets Restructuring costs, net Equity-based compensation Asset impairments 15.3 Integration and transaction costs Purchase accounting adjustments (0.4) Total adjustments to operating income Non-GAAP adjusted operating income $ $ $ $ Income before income taxes, as reported $ 96.3 $ 61.5 $ $ Income tax expense, as reported (34.3) (15.9) (42.8) (36.9) Net income, as reported $ 62.0 $ 45.6 $ 74.5 $ 85.1 Adjustments: Total pretax adjustments to operating income Pretax amortization of deferred financing costs & OID (1) Pretax acquisition related interest (1) Pretax loss on debt transactions (2) Pretax gains on sale of equity investment (2) (0.1) (0.3) (0.5) (2.7) Tax effects of adjustments and other tax items (3) (41.4) (32.4) (83.4) (54.5) Non-GAAP adjusted net income $ $ 94.8 $ $ Diluted EPS, as reported $ 0.32 $ 0.24 $ 0.38 $ 0.44 Non-GAAP adjusted diluted EPS $ 0.74 $ 0.49 $ 1.22 $ 0.91 (1) Included in interest expense. (2) Included in other income (expense), net. CommScope Holding Company, Inc. Reconciliation of GAAP Measures to Non-GAAP Adjusted Measures Note: Components may not sum to total due to rounding (Unaudited -- In millions, except per share amounts) Three Months Ended June 30, Six Months Ended June 30, (3) T he tax rates applied to adjustments reflect the tax expense or benefit based on the tax jurisdiction of the entity generating the adjustment. T here are certain items for which we expect little or no tax effect.

5 Segment Information Sales by Segment (1) % Change Q Q Q Sequential YOY Connectivity Solutions % % Mobility Solutions % 2.6 % Total Net Sales $ 1,306.8 $ 1,144.0 $ % 50.7 % Non-GAAP Adjusted Operating Income by Segment (1) % Change Q Q Q Sequential YOY Connectivity Solutions % % Mobility Solutions % 18.4 % Total Non-GAAP Adjusted Operating Income $ $ $ % 65.4 % (1) As of January 1, 2016, the Company began reporting in two operating segments: Connectivity Solutions and Mobility Solutions. All prior period amounts have been restated to reflect these operating segment changes. Components may not sum to total due to rounding CommScope Holding Company, Inc. Pro Forma Sales Pro Forma Sales (1) Q Q Q Q (2) Full Year 2015 Legacy CommScope $ $ $ $ $ 3,278.2 Legacy BNS ,700.2 Total Pro Forma Net Sales $ 1,250.3 $ 1,338.3 $ 1,247.3 $ 1,142.5 $ 4,978.4 Pro Forma Sales by Segment (1) Q Q Q Q Full Year 2015 Connectivity Solutions $ $ $ $ $ 2,920.7 Mobility Solutions ,057.6 Total Pro Forma Net Sales $ 1,250.3 $ 1,338.3 $ 1,247.3 $ 1,142.5 $ 4,978.4 (1) As of January 1, 2016, the Company began reporting in two operating segments: Connectivity Solutions and Mobility Solutions. All prior period amounts have been restated to reflect these operating segment changes. (2) As reported Components may not sum to total due to rounding The unaudited pro forma amounts are presented as though the BNS acquisition had been completed as of January 1, This pro forma information has not been prepared in accordance with U.S. generally accepted accounting principles. Accordingly, the pro forma financial information should not be relied upon as being indicative of the results that would have been realized.

6 Reconciliation of GAAP to Non-GAAP Adjusted Operating Income by Segment Second Quarter 2016 Non-GAAP Adjusted Operating Income Reconciliation by Segment (1) Connectivity Solutions Mobility Solutions Total Operating income, as reported $ 92.9 $ 91.0 $ Amortization of purchased intangible assets Restructuring costs, net Equity-based compensation Integration and transaction costs Purchase accounting adjustments (0.4) (0.4) Non-GAAP adjusted operating income $ $ $ Non-GAAP adjusted operating margin % 21.7% 23.2% 22.3% First Quarter 2016 Non-GAAP Adjusted Operating Income Reconciliation by Segment (1) Connectivity Solutions Mobility Solutions Total Operating income, as reported $ 50.0 $ 40.7 $ 90.7 Amortization of purchased intangible assets Restructuring costs, net Equity-based compensation Asset impairments Integration and transaction costs Purchase accounting adjustments Non-GAAP adjusted operating income $ $ 76.6 $ Non-GAAP adjusted operating margin % 19.6% 16.8% 18.5% Second Quarter 2015 Non-GAAP Adjusted Operating Income Reconciliation by Segment (1) Connectivity Solutions Mobility Solutions Total Operating income, as reported $ 39.2 $ 70.2 $ Amortization of purchased intangible assets Restructuring costs, net Equity-based compensation Integration and transaction costs Non-GAAP adjusted operating income $ 72.5 $ $ Non-GAAP adjusted operating margin % 20.6% 20.1% 20.3% (1) As of January 1, 2016, the Company began reporting in two operating segments: Connectivity Solutions and Mobility Solutions. All prior period amounts have been restated to reflect these operating segment changes. Components may not sum to total due to rounding

7 Adjusted Free Cash Flow Adjusted Free Cash Flow Q Q Cash flow from operations $ $ 72.0 Integration and transaction costs Redemption premium 9.9 Capital expenditures (17.7) (15.9) Capex related to BNS integration Adjusted Free Cash Flow $ $ 75.7 CommScope Holding Company, Inc. Quarterly Adjusted Operating Income and Adjusted EBITDA GAAP to Non-GAAP Adjusted Operating Income and Adjusted EBITDA Reconciliation Q Q Q Q Q Operating income (loss), as reported $ $ 90.7 $ 21.6 $ (42.5) $ Amortization of purchased intangible assets Restructuring costs, net Equity-based compensation Asset impairments Integration and transaction costs Purchase accounting adjustments (0.4) Non-GAAP adjusted operating income $ $ $ $ $ Non-GAAP adjusted operating margin % 22.3% 18.5% 17.2% 20.7% 20.3% Depreciation Non-GAAP adjusted EBITDA $ $ $ $ $ Components may not sum to total due to rounding Note: Pro forma LTM adjusted EBITDA for June 2016 was $1,015.8 million, which included the impact of the BNS and Airvana acquisitions ($38.6 million) so that the impact of the acquisitions is fully reflected in the twelve-month period. See our Form 10-Q for further information.

8 Reconciliation of GAAP Measures to Non-GAAP Adjusted Measures (Unaudited -- In millions, except per share amounts) Three Months Ended September 30, 2016 Outlook Full Year 2016 Operating income $166 - $183 $562 - $597 Adjustments: Amortization of purchased intangible assets $74 $297 Equity-based compensation $9 $36 Restructuring costs, integration costs and other (1) $16 - $19 $95 - $105 Total adjustments to operating income $99 - $102 $428 - $438 Non-GAAP adjusted operating income $265 - $285 $990 - $1,035 Diluted earnings per share $ $0.39 $ $0.96 Adjustments (2) : Total adjustments to operating income $ $0.35 $ $1.51 Debt-related costs and other special items (3) $(0.01) - $0.00 $ $0.05 Non-GAAP adjusted diluted earnings per share $ $0.74 $ $2.52 (1) Reflects projections for restructuring costs, integration and transaction costs and other special items. Actual adjustments may vary from projections. (2) The tax rates applied to projected adjustments reflect the tax expense or benefit based on the expected tax jurisdiction of the entity generating the projected adjustments. There are certain items for which we expect little or no tax effect. (3) Reflects projections for amortization of debt issuance costs, loss on debt extinguishment, net investment gains or losses and other tax items. Actual adjustments may vary from projections. Our actual results may be impacted by additional events for which information is not currently available, such as additional restructuring activities, asset impairments, debt extinguishments, additional transaction and integration costs, foreign exchange rate fluctuations and other gains or losses related to events that are not currently known or measurable. See Caution Regarding Forward-Looking Statements and Description of Non-GAAP Financial Measures.